FAQ
General
What is the Master protocol what is it trying to achieve?
The Master Protocol is a communications protocol that uses the Bitcoin block chain to enable features such as smart contracts, user currencies and decentralized peer-to-peer exchanges. A common analogy that is used to describe the relation of the Master Protocol to Bitcoin is that of HTTP to TCP/IP: HTTP, like the Master Protocol, is the application layer to the more fundamental transport and internet layer of TCP/IP, like Bitcoin.
Why use Mastercoins (MSC)? Why not just use bitcoins?
In order to understand the need for the Master Protocol and Mastercoin, we need to first consider the following fact: Bitcoin is an open-source project with a capitalization of several billion US dollars (Bitcoin is not a company, and bitcoins are not stocks but if one multiplies the number of existing bitcoins by the price of one bitcoin, one comes up with the capitalization). As such, changes to the Bitcoin protocol have to happen very carefully because if something “breaks,” the whole Bitcoin economy may collapse. Making changes to the protocol while the network is in use has been likened to fixing a “787 airplane while in flight”, and because of that, the developers working on Bitcoin have been extremely careful introducing new features.
The Master Protocol was created so that new and innovative features could be implemented relatively quickly. And because the Master Protocol is using the Bitcoin protocol to enable features like smart contracts and user-defined currencies without disrupting Bitcoin, it is different compared to alternative cryptocurrencies that use their own block chain, and therefore compete with Bitcoin.
Mastercoins on the other hand, were created so that the features of the Master Protocol can be used and so that the Master Protocol has a means for monetization. It is not uncommon for projects that propose innovative features to fail if they don’t have a means to be monetized. The Master Protocol with the introduction of Mastercoins avoids that problem.
Who created the Master Protocol?
J. R. Willett is the computer scientist who described the features of the Master Protocol in a white paper that he called “The Second Bitcoin Whitepaper”. J. R. Willett was working at the time as a software engineer in an avionics company. Soon after the publication of his whitepaper, he started working for a startup in Washington state developing iOS and Android applications. J. R. Willett joined the Mastercoin Foundation as chief architect in February 2014.
Is the Master Protocol open-source?
The Master Protocol specification as well as its implementations are open-source.
What are Mastercoins and how many are there?
Mastercoins (symbol MSC) are digital tokens that are necessary for the use of some features of the Master Protocol. The total number of Mastercoins in existence is 619,478.6 and no more MSC will ever be created. Additionally, Mastercoins can not be mined into existence. The 619,478.6 MSC were generated as a result of a public fundraiser in the style of Kickstarter.com. For more details about the algorithm by which Mastercoins were generated, please read the History of Mastercoin article on this website.
What do Master Protocol addresses look like?
Master Protocol addresses are the same as Bitcoin addresses, and as a result, a Bitcoin address can hold both bitcoins and Mastercoins.
Note:You cannot use a web hosted address like a BTC address of*an exchange. In order to access your MSC you must have access to your private key.
How can I find how many Mastercoins are stored in an address?
Like with Bitcoin you can find the number of bitcoins stored in an address either by using specialized wallet software or a web service. For examples on how to use Master Protocol-capable wallet software see here. Several web services can provide information about the number of Mastercoins in an address; a popular one is Masterchest.info.
How do I send and receive Mastercoins?
There are several ways to send Mastercoins. Some of them are highly technical but the easiest way involves using one of the specialized Mastercoin wallets. See here for details.
How can I buy Mastercoins (MSC)?
Currently, you can buy Mastercoins from a few exchanges. MasterXchange.com is the largest in terms of volume. We have created a detailed tutorial that guides you, step-by-step through the process.As soon as the decentralized exchange feature of the Master Protocol is implemented, you can trade Mastercoins for Bitcoins directly from your Mastercoin wallet.
Note: There is another cryptocurrency called Mastercoin (symbol, MST) that is traded on Cryptsy.com. There is no relationship between MSC and MST, so do not buy MSTs expecting to use them in Master Protocol! Be careful to always buy MSC, if you would like to use the Master Protocol and its features.
Are Mastercoins pre-mined?
Mastercoins cannot be mined and therefore they cannot be pre-mined.
Mastercoins, were not pre-mined. They were generated with a Kickstarter-style campaign that took place between August 1 and August 31, 2013. During the campaign, every person who sent bitcoins to a specific Bitcoin address, called the Exodus address, received at least 1/100 btc/Mastercoins, plus a bonus based on how early in the period they sent the funds. The Mastercoins generated in this process, plus 10% set aside for the continuous development of the protocol correspond to the total number of available Mastercoins (619,478.6 MSC).
For more information about the fundraiser, see here
What happened to the bitcoins sent to the Exodus Address after August 31, 2013?
The bitcoins were refunded to their sender.
Who controls the bitcoins that were collected in the campaign?
The board of the Mastercoin Foundation controls the proceeds of the fundraiser. The Mastercoin Foundation aims to relinquish the control of the funds to the holders of Mastercoins as soon as a decision-making through proof-of-stake can be technically implemented.
For the exact schedule of release and spending of the funds see here
How many bitcoins were raised in the initial Mastercoin crowdsale?
4740.6200979 BTC as per our public ledger.
Is it fair that the people who invested early to the Master Protocol may be richly rewarded?
Early investors in the Master Protocol have the potential to be richly rewarded if the features of the Master Protocol are successfully implemented. The same investors assumed a high risk when they invested since the Master Protocol was originally just a set of ideas, a whitepaper. This high-risk, high-reward balance is common in many investments: it may not seem fair if the investment is successful but it may not feel fair if the investment is a failure.
How would a peer-to-peer distributed exchange operate?
As soon as the peer-to-peer distributed exchange functionality for Mastercoins and other ctyptocurrencies is implemented, anybody who has downloaded a Master Protocol-capable wallet will be able to post an offer for the sale or purchase of Mastercoins, bitcoins, or other cryptocurrencies. As soon as such an offer is posted, peers will be able to view it. Users interested in the offer will then be able to accept it with a simple click of a button. The exchange of Mastercoins, bitcoins or other cryptocurrencies will then be handled by the network, securely, without the interference of a trusted third-party.
Can I use the Master Protocol to issue tokens for my company or property?
The Master Protocol will implement a “smart property” feature, that will allow users to issue tokens that correspond to property, company ownership, or other assets. Those tokens can then be traded in a peer-to-peer, decentralized manner, using the Master Protocol.
Note, that the issuers of such tokens should confirm that they abide with relevant laws in their jurisdiction.
What is a savings address?
A savings address is a feature of the Master Protocol that allows any transactions originating from the savings address to be reversed for a specified period of time. Such savings addresses could be used for long-term storage of bitcoins for instance, and they could safeguard the bitcoin owners from the accidental loss or theft of the private keys to the savings address.
Details of how this is going to be implemented in the Master Protocol are given here, but the main idea is that the savings address will be controlled by a different address, called the guardian address. When a transaction from a savings address needs to be reverted, a message could be sent from the guardian address to the network in order to revert the transaction and transfer the funds to the guardian address.
To guard against the loss of both the savings and guardian address private key, one should keep them physically separated. Also, it is possible that merchants may choose not to accept funds from a savings address because of the risk of a customer-initiated “chargeback.”
What is a data stream?
A data stream is a mechanism by which the Master Protocol facilitates the inclusion of external data into the Bitcoin blockchain. The inclusion of such data incurs a fee that the publisher of the data stream has to pay.
Publishers of data streams are incentivized to publish their data into the Bitcoin blockchain, because they will collect a fee every time someone uses the data to make a bet, or a contract that depends on the value of the data in the stream. In other words, users of the Master Protocol will be able to bet on the price of commodities, go long or short on the price of stocks and do that in a completely peer-to-peer, decentralized manner.
For more information about data streams, bets and contracts-for-difference, see (this article on this website)[1].
May I use the Master Protocol to create my own currency?
User-currencies are one of the experimental features of the Master Protocol. If implemented, users will be able to easily issue their own token and have it traded in peer-to-peer, decentralized manner. The Master Protocol specifies ways that such currencies could be stabilized from price fluctuations through the use of escrows. For more information on this feature, please see the latest version of the Master Protocol specification
Note, that the issuers of such tokens should confirm that they abide with relevant laws in their jurisdiction.
Does the Master Protocol need the Bitcoin network to operate?
The Master Protocol operates by attaching small amounts of data to transactions that go through the Bitcoin network. Although the Bitcoin network is currently the largest and most secure network in the world, nothing precludes the Master Protocol on getting implemented on top of any other cryptocurrency network.
What is the Mastercoin Foundation and what is its role in the development of the Master Protocol?
The Mastercoin Foundation is a non-profit organization incorporated in the state of Delaware, USA, that promotes the development of the Master Protocol. The board of the Foundation makes decisions about the order by which the Master Protocol features should be implemented, and manages the bounty system by which the community members are incentivized to contibute to the development of the protocol.
The Mastercoin Foundation aims to decentralize its operation to all owners of Mastercoins and allow decision making through a proof-of-stake system, according to which voting power is proportional to the amount of Mastercoins that each stakeholder owns.
What are some of the stated goals of the Mastercoin Foundation for the Master Protocol?
The board of the Mastercoin Foundation has set an initial roadmap for the development of the Master Protocol features. The first goal is the development of the decentralized exchange and its release by March 15, 2014. As soon as the decentralized exchange is operational, the feature of smart property will be implemented.
How is the implementation of the features of the Master Protocol achieved?
The features specified in the Master Protocol are getting implemented through community participation. Community contributions are rewarded by the distribution of Mastercoins and bitcoins through a system of “bounties” to the people working on the project. The board of the Mastercoin Foundation is currently coordinating the creation and payment of the bounties but the stated goal of the Foundation is to allow the whole Master Protocol community to take over the responsibility through proof-of-stake voting.
How can I get involved and contribute to the development of the Master Protocol? Do I need to be a developer?
Every body can contribute to the development of the Master Protocol. Although software developers are necessary for the implementation of the features of the Protocol, people can also contribute by offering their expertise in business development, design, marketing, education etc.
Please read How to contribute for details on how to get involved and contribute to the Master Protocol.
The Master Protocol uses the Bitcoin block chain as a tool to implement features like smart property, decentralized exchange, savings wallets, user-defined currencies, etc.
Because of that, the Master Protocol is not:
- Is not another alt-coin because it uses completely new computer code that uses the Bitcoin network, whereas alt-coins modify the Bitcoin code and have their own block chains.
- Is not MST that is a Bitcoin clone alt-coin that chose the same name, Mastercoin, even though the Mastercoin idea was public before the release of MST.
- Is not like colored coins because it has its own token, the Mastercoins, that can be used for its development and monetization, whereas colored coins do not.
- Is not like Ripple, because Ripple uses a IOU system to transfer value, and not the Bitcoin block chain.
- Is not like Protoshares that are issued by a for-profit corporation and run on their own block chain; The Mastercoin is curated by the non-profit Mastercoin Foundation and it uses the Bitcoin block chain.
- Is not like Ethereum that has its own block chain and for which part of the fundraiser funds are scheduled to be directed to its founders.
Where does Mastercoin derive its value from? Why is it valuable?
The initial value for mastercoins came out of the fundraiser "anchoring". People were willing to "sacrifice" 1 BTC in exchange for about 100 MSC, so it anchored the initial value of MSC in at least 0.01 BTC per MSC.
The more general answer is that Mastercoin provides a set of features that only work with MSC or Mastercoin-based currencies, and there is a limited number of them. So, in order to enjoy these features, you have to own some mastercoins, giving them an independent value. The more real world usage Mastercoin sees, the higher the value of each mastercoin. In addition, as always, a lot of its value is currently driven by speculators executing a price discovery process.
Specifically, mastercoin tokens are used for:
- Creating derived currencies and smart property are used to create and/or promote smart property tokens as an anti-spam measure.
- Mastercoins are used as the liquidity layer for Contracts for Difference
- The distributed exchange between Mastercoins and user generated currencies is more efficient than BTC<->MSC or BTC<->Derived exchanges - the latter require a 2 step commit process.
- As the protocol evolves, more direct usages for Mastercoins may be created.
What happens to the bitcoins and mastercoins we have if the Foundation decided to shut down?
This scenario does not seem likely. If it did happen however, we would send all the bitcoins we hold to the current owners of MSC, in proportion to their MSC holdings. The MSC that the Foundation has may be kept or burned (new Dev MSC are being generated at 1Exodus all the time).
Distributed Exchange
Why are there only SELL orders, but no BUY orders
This is due to a technical limitation at the protocol level, for which there is no known solution.
In order to place 'MSC buy' orders (which are actually 'BTC sell' orders), you would have to commit sending BTC to the seller after he sends you the MSC. Because one side of the trade (sending BTC) does not use the Master Protocol, there is no way to enforce it to uphold its commitment.
See https://github.com/mastercoin-MSC/spec#distributed-exchange
